A telehealth platform that routes prescriptions to one pharmacy, by referral fee, marketing arrangement, or shared ownership, is building the fact pattern the Office of Inspector General has flagged as a federal Anti-Kickback Statute problem, on both sides of the arrangement. Patients keep the legal right to fill a prescription at the pharmacy of their choice, a right Kentucky, Oklahoma, and other states independently protect through any-willing-pharmacy laws. For a telehealth provider building a pharmacy relationship, the structure of the arrangement, not its label, decides whether it holds up.
How Prescription Routing Triggers the Anti-Kickback Statute
The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), makes it a felony to knowingly and willfully offer, pay, solicit, or receive remuneration to induce or reward referrals of items reimbursable by a federal health care program, including prescriptions billed to Medicare or Medicaid. The statute defines remuneration broadly: anything of value, direct or indirect, cash or in kind. Courts ask only whether one purpose of a payment was to induce referrals, not whether it was the only purpose. A conviction carries a fine of up to $100,000 and up to 10 years in prison, with automatic exclusion from federal health care programs.
Payment and Ownership Structures That Raise Red Flags
OIG's closest advisory opinion addressed a specialty pharmacy's plan to pay local pharmacies a fee for each prescription they referred, and found the arrangement posed more than a minimal risk of fraud and abuse. The fee was tied to referral volume, which OIG called inherently subject to abuse, because the pharmacy was paid only when its services produced a referral. Requiring it to disclose the patient's right to fill elsewhere did not change OIG's conclusion: the fee structure created the risk, not the disclosure. The same reasoning reaches shared ownership. If a telehealth company holds a financial interest in the pharmacy filling its scripts, the profit flowing from that volume is remuneration under the statute, whether or not an invoice changes hands.
OIG has called a referral fee tied directly to the volume of prescriptions a pharmacy sends it inherently subject to abuse, because the fee is linked to the business it produces rather than to any service performed.
Patient Choice and Any-Willing-Pharmacy Laws
Federal kickback exposure is not the only constraint on routing prescriptions to one pharmacy. Kentucky, Oklahoma, and other states have enacted any-willing-pharmacy or any-willing-provider laws requiring a pharmacy network to admit any pharmacy willing to accept the network's standard terms, limiting a platform's ability to contract around patient choice even where no referral fee changes hands. These laws vary by state and plan type, reaching insured plans more fully than self-funded ERISA plans. A telehealth company directing patients to one affiliated pharmacy regardless of network participation can face exposure under state pharmacy-access law even where the federal kickback analysis is close.
Building a Defensible Pharmacy Relationship
A defensible arrangement pays the pharmacy fair market value, set in advance, independent of referral volume, and preserves the patient's actual choice of pharmacy. OIG's July 2022 telehealth fraud alert raises a related concern: a telemedicine company that furnishes only one product or class of products, narrowing a prescriber's treatment options, is one of the suspect characteristics on its list. A pattern concentrating referrals with one affiliated pharmacy is also the kind of outlier claims pattern that can draw a UPIC audit referral, and claims tracing back to a kickback violation are false claims under the civil false claims act, exposing both the telehealth company and the pharmacy to recoupment on top of any criminal referral.
Pharmacy steering is one piece of a broader compliance picture. Providers routing prescriptions through one pharmacy are often navigating interstate licensure exposure, originating site documentation, and verifying and recording a patient's location, alongside the referral-fee risk already covered in Telehealth and the Anti-Kickback Statute and the telemarketing-specific exposure covered in Marketing Arrangements in Telehealth: Where Kickback Risk Concentrates.
Why Early Legal Counsel Is Critical
It is critical that telehealth providers and their pharmacy partners promptly retain experienced healthcare defense counsel before finalizing a prescription-routing arrangement, or upon receiving any government inquiry into an existing one. Early legal intervention can structure the arrangement around fair market value rather than referral volume and preserve relevant defenses. Delaying legal review can significantly affect the outcome of a matter and expose both parties to liability that proper structuring could have avoided.
How Health Law Alliance Can Help
Health Law Alliance represents telehealth companies and pharmacies in structuring, reviewing, and defending prescription-routing and pharmacy-referral arrangements against Anti-Kickback Statute and state pharmacy-access exposure.
Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience.
If your telehealth company or pharmacy is structuring, or has already been questioned about, a prescription-routing arrangement, contact Health Law Alliance's telehealth defense team for a free, confidential consultation before the arrangement draws regulatory attention.
